Xu Feng , Mingya Hu , Cong Luo , Jiaquan Yao , Kunpeng Zhang
{"title":"Labor litigation and corporate cash holdings: Insights from the textual analysis of judicial documents","authors":"Xu Feng , Mingya Hu , Cong Luo , Jiaquan Yao , Kunpeng Zhang","doi":"10.1016/j.bar.2024.101541","DOIUrl":null,"url":null,"abstract":"<div><div>Labor litigation involves disputes between a firm and its employees over the latter's rights and obligations, and it may increase the uncertainty of firms' business operations and thus affect their financial decisions. Using textual analysis of judicial documents on labor and personnel disputes obtained from a specialized dataset, we find that labor litigation prompts firms to increase their cash holdings. Further analysis indicates that this effect mainly occurs in firms with higher labor adjustment costs, in regions where labor regulations and labor protection are strongly enforced, and in firms with high corporate social responsibility and high financial constraints. Finally, we find that increasing corporate cash holdings after labor litigation improves both firm performance and the market value of cash.</div></div>","PeriodicalId":47996,"journal":{"name":"British Accounting Review","volume":"58 2","pages":"Article 101541"},"PeriodicalIF":9.4000,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"British Accounting Review","FirstCategoryId":"91","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0890838924003238","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"2024/12/4 0:00:00","PubModel":"Epub","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
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Abstract
Labor litigation involves disputes between a firm and its employees over the latter's rights and obligations, and it may increase the uncertainty of firms' business operations and thus affect their financial decisions. Using textual analysis of judicial documents on labor and personnel disputes obtained from a specialized dataset, we find that labor litigation prompts firms to increase their cash holdings. Further analysis indicates that this effect mainly occurs in firms with higher labor adjustment costs, in regions where labor regulations and labor protection are strongly enforced, and in firms with high corporate social responsibility and high financial constraints. Finally, we find that increasing corporate cash holdings after labor litigation improves both firm performance and the market value of cash.
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The British Accounting Review*is pleased to publish original scholarly papers across the whole spectrum of accounting and finance. The journal is eclectic and pluralistic and contributions are welcomed across a wide range of research methodologies (e.g. analytical, archival, experimental, survey and qualitative case methods) and topics (e.g. financial accounting, management accounting, finance and financial management, auditing, public sector accounting, social and environmental accounting; accounting education and accounting history), evidence from UK and non-UK sources are equally acceptable.
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